Vijay Devnani vs Sebi

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision : 07.02.2022 Appeal No. 3 of 2022 Vijay Devnani Klassic Tower "B" Wing, Shop No. 9, Ground Floor, Dr. Anand Rao Nair Road, Agripada, Mumbai - 400 011. ..... Appellant Versus 1. Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. 2. National Stock Exchange of India Ltd. Exchange Plaza, C-1, Block G, Bandra Kurla Compex, Bandra (East), Mumbai - 400 051. 3. Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001. 4. Balance Equity Broking (India) Pvt. Ltd. 119 Business Point Cooperative Premises Society Ltd., Office No. A-316, 3rd Floor, Near Sahar Cargo, Sahar Village, Andheri (East), Mumbai - 400 099. .... Respondents Ms. Sonal, Advocate with Mr. Vivek M. Sharma, Advocate i/b Mr. Vivek M. Sharma, Advocate for the Appellant. 2 Mr. Sumit Rai, Advocate with Mr. Mihir Mody, Mr. Arnav Misra and Mr. Mayur Jaisingh, Advocates i/b. K. Ashar & Co. for Respondent no. 1 SEBI. Mr. Zal Andhyarujina, Senior Advocate with Mr. Jahan Dastur, Mr. Rashid Boatwalla and Mr. Dhruv Jadhav, Advocates i/b MKA & Co. for the Respondent No. 2 NSE.

Mr. Tomu Francis, Advocate with Ms. Zarnaab Aswad, Advocate i/b Khaitan & Co for Respondent No. 3 BSE. CORAM : Justice Tarun Agarwala, Presiding Officer Justice M.T. Joshi, Judicial Member Per : Justice Tarun Agarwala, Presiding Officer (Oral) 1. We have heard the learned counsel for the parties. The appellant is a constituent of respondent no. 4 who is a broker and whose trading rights were suspended on September 9, 2020. The appellant made a request to the Stock Exchange to release the margin money and the cash which was lying with the broker to the tune of Rs. 21.64 crore. Since the request of the appellant was not being considered a complaint was filed before the Securities and Exchange Board of India ('SEBI' for short) which also remained unattended. The appellant thereafter filed a Writ Petition before the Bombay High Court which was disposed of with a direction to SEBI to decide the complaint of the appellant on its own merits. This complaint was eventually decided by the 3 impugned order / communicated dated October 26, 2021 wherein SEBI has disposed of the complaint with the following directions:- 2. The learned counsel for SEBI further submitted that the preliminary objection raised in its reply is not been raised before this Tribunal.

3. The complaint was with regard to the utilization of the appellant's margin money lying with the broker respondent no. 4 being used by the Stock Exchange to settle the claims of 122 of the 124 constituents of the broker respondent no. 4. According to the appellant, every time a payment was being made to a constituent of respondent no. 4 the said amount was being transferred from the margin money of the appellant. This allegation has not been dealt with in the impugned order / communication and the impugned order observes that it would be open to the appellant to file a claim which would be considered under the Investors Protection Fund (IPF). 4 4. In our view the respondent no. 4 i.e. a broker has not as yet been declared a defaulter and therefore no claim application can be filed as yet. Thus, the impugned order is totally erroneous and has been passed without any application of mind and cannot be sustained and is quashed. The appeal is allowed. The matter is remitted to SEBI to pass a reasoned and speaking order on the complaint made by the appellant after considering the views of the Stock Exchanges, if any, within two weeks from today.

5. The present matter was heard through video conference due to Covid-19 pandemic. At this stage it is not possible to sign a copy of this order nor a certified copy of this order could be issued by the registry. In these circumstances, this order will be digitally signed by the Private Secretary on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Parties will act on production of a digitally signed copy sent by fax and/or email. Justice Tarun Agarwala Presiding Officer Justice M.T. Joshi RAJALA Digitally signed by Judicial Member 07.02.2022 KSHMI RAJALAKSHMI H NAIR Date: 2022.02.09 msb H NAIR 09:49:01 +05'30'